House price boom ripples out of London, across Britain
04-11-2014
Property sales highest for six years amid “truly national” market recovery, experts say, as Liberal Democrats unveil revised mansion tax plans
Figures from the Office for National Statistics show the average UK house price stands at £254,000, up from £194,000 five years ago Photo: ALAMY
By Richard Dyson, and Matthew Holehouse
The housing boom is spreading across the country, with rapidly rising prices and long queues of buyers no longer restricted to London, experts are to announce.
Property sales in the first three months of 2014 reached a six-year high as the market recovered on a “truly national” scale, according to the Royal Institution of Chartered Surveyors (Rics).
Activity is at levels last seen in early 2008, before the banking crisis took hold, and is spreading to the Home Counties and beyond, figures suggest.
The trend is “striking in that it is clearly broadening out”, said Simon Rubinsohn, a Rics economist. “There has been a sense that it was one story for London and a very different outlook everywhere else, with perhaps a few other city centres edging ahead. But that is not the case any longer,” he added.
“Now that the housing market recovery is well and truly under way and mortgage finance is more readily available, buyers seem to be looking to test the market right across the country, not just in the usual hotspots of the South East.”
Rics’ 513 branches of estate agents and valuers in England and Wales reported average sales of 23 properties each in the first quarter of the year. This is up from a low of 12 in 2009. In mid-2007, the peak of the last housing boom, chartered surveyors were selling properties at a rate of about 40 per quarter.
Prices were also on the rise. Rics has pushed up its forecast for national house price growth this year from six per cent to eight per cent. Its surveyors were most optimistic about price rises in the East Midlands and the North West.
Mr Rubinsohn said he was “hopeful” that there would not be “runaway” growth on the scale experienced in London, where some boroughs have recorded annual increases of 30 per cent, according to Nationwide. The building society’s latest data showed London prices rose 18 per cent in the 12 months to March, and 9 per cent nationally.
Figures from the Office for National Statistics show the average UK house price stands at £254,000, up from £194,000 five years ago. The average London house price is £458,000, up from £301,000 over the same period.
Most authoritative commentators are expecting national house price growth in the high single digits this year. Prices are expected to rise by 25 per cent to 30 per cent over the next five years.
Rics is also reporting a rise in registrations of interest as new buyers emerge to strengthen demand. The strong market is being driven by “easier credit”, with first-time buyers able to “reap the benefits” and, in some cases, step on to the property ladder with smaller deposits. This has been aided by government schemes such as Help to Buy.
However, the rapid growth in demand is not being matched by supply of either new housing or homes coming to market, Rics warns.
Price expectations of surveyors
A resurgent housing market has reignited debate over the need for a property-related tax, with revenues from stamp duty, inheritance tax and capital gains tax predicted to rocket.
On Wednesday the Liberal Democrats unveiled revised plans for its controversial mansion tax, which would hit tens of thousands of property owners.
Danny Alexander, the Chief Secretary to the Treasury, said a charge on properties worth more than £2 million, which is being prepared by Whitehall officials, could be introduced “quickly” after the next election. The tax would slow the rise in property prices and “release a bit of steam” from the top end of the property market, he claimed.
A mansion tax is a cherished Liberal Democrat policy and is likely to be at the centre of any future Coalition negotiations. George Osborne is understood to be sympathetic to a levy on high-value homes but the measures have been resisted by David Cameron.
Critics say the policy will hit elderly homeowners whose houses have risen in value but who do not have high incomes. The Treasury estimated last year that about 55,000 homes were in range for the tax, but a new analysis by the property website Zoopla, also published on Wednesday, calculated that the levy would hit 82,000 homes.
The Liberal Democrats originally proposed a one per cent annual surcharge on a property’s value above £2 million, meaning the owner of a £3 million house would pay £10,000 a year. On Wednesday the Lib Dems rebranded the measures as a “high-value property levy”. Under the new scheme, houses worth more than £2 million will be taxed under bands which could be as wide as £5 million, reducing the scope for appeals.
The scheme would contain “safeguards” to protect pensioners with high assets but low incomes.